Friday, 19 December 2008

In any argument with the Climate Faithful the first response to inconvenient facts undermining the AGW proposition is to dismiss the credentials of the information's source.

"He's not a climate scientist" is a common statement.

Neither, one should point out, is Rajendra Pachauri, the head of IPCC.

Having failed to bring the argument to an end by questioning people's qualifications the Climate Faithful then move on to associating scientists with the oil industry.

When David Evans comments on climate science it's a bit hard to question his credentials:

Dr David Evans worked for the Australian Greenhouse Office from 1999 to 2005, building the carbon accounting model that Australia uses to track carbon in its biosphere for the purposes of the Kyoto Protocol. He is a mathematician and engineer, with six university degrees including a PhD from Stanford University.

He must be a cigarette smoking, oil industry consultant...

Here's his opinion piece on the government's new emissions trading scheme:

Rudd has failed to see through the vested interests that promote anthropogenic global warming (AGW), the theory that human emissions of carbon cause global warming. Though masquerading as "science based", the promoters of AGW have a medieval outlook and are in fact anti-science. Meanwhile carbon is innocent, and the political class is plunging ahead with making us poorer because they do not understand what science really is or what the real science is.

The Renaissance began when the absolute authority of the church and ancient texts was overthrown. Science then evolved as our most reliable method for acquiring knowledge, free of superstition and political authority. Suppose you wanted to know whether big cannonballs or small cannonballs fell faster. In medieval times you argued theoretically with what could be gleaned from the Bible, the works of Aristotle, or maybe a Papal announcement. In the Renaissance you ignored the authorities and simply dropped cannon balls from a tower and observed what happened - this was science, where empirical evidence trumps theory.

From 1975 to 2001 the global temperature trended up. How do you empirically determine the cause of this global warming? It turns out we can learn a lot simply by observing where the warming occurred: each possible cause of global warming heats the atmosphere differently, heating some parts before others. The pattern of warming is the cause's "signature".

The signature of an increased greenhouse effect consists of two features: a hotspot about 10 km up in the atmosphere over the tropics, and a combination of broad stratospheric cooling and broad tropospheric warming. The signature of ozone depletion consists just of the second feature. These signatures are theoretically derived by the Intergovernmental Panel on Climate Change (IPCC), and are integral to our understanding of how the atmosphere works.

We have been observing temperatures in the atmosphere for decades using radiosondes - weather balloons with thermometers that radio back the temperature as the balloon ascends through the atmosphere. The radiosonde measurements for 1979-1999 show broad stratospheric cooling and broad tropospheric warming, but they show no tropical hotspot. Not even a small one.

Empirically, we therefore know that an increased greenhouse effect was not a significant cause of the recent global warming. (Either that or the signatures from the IPCC are wrong, so its climate models and predictions are rubbish anyway.)

Human carbon emissions were occurring at the time but the greenhouse effect did not increase. Therefore human carbon emissions did not increase the greenhouse effect, and did not cause global warming. So AGW is wrong, and carbon is innocent. Suspect exonerated - wrong signature.

Alarmist scientists (supporters of AGW) objected that the radiosonde thermometers were not accurate and maybe the hotspot was there but went undetected. But there were hundreds of radiosondes, so statistically this is unlikely. They have also suggested we ignore the radiosonde thermometers, and use the radiosonde wind measurements instead. When combined with a theory about wind shear they estimated the temperatures on their computers - and say that the results show that we cannot rule out the presence of a hotspot. But thermometers are designed to measure temperature, so it's a bit of a stretch to claim that wind gauges are accidentally better at it. Serious alarmist scientists do not claim that the hotspot was found, only that we might have missed it. The obvious conclusion is that the hotspot was too weak to be easily detected. We cannot collect any more data from the past warming, and there is no sign of the hotspot in the data that was collected - so the occasional claims that appear on the Internet that the hotspot has been found are simply wrong.

So can we tell from the observed warming pattern what did cause the global warming? Unfortunately we have little idea of the signatures of some of the suspects, such as cosmic rays or the Pacific Decadal Oscillation, so we cannot say except to note that ozone depletion was one of the causes.

Is there any observational evidence in favor of AGW? As of 2003, none at all.

The only supporting evidence for AGW was the old ice core data. The old ice core data, gathered from 1985, showed that in the past half million years, through several global warmings and coolings, the earth's temperature and atmospheric carbon levels rose and fell in lockstep. AGW was coming into vogue in the 1980s, so it was widely assumed that it was the carbon changes causing the temperature changes.

By the late 1990s ice core techniques had improved. In the old ice cores the data points were a few thousand years apart, but in the new ice core data they were only a few hundred years apart. In the early 1990s, New Scientist magazine anticipated that the higher-resolution data would seal the case for AGW.

But the opposite occurred. By 2003 it had been established to everyone's satisfaction that temperature changes preceded corresponding carbon changes by an average of 800 years: so temperature changes caused carbon changes - a warmer ocean supports more carbon in the atmosphere, after delays due to mixing. So the ice core data no longer supported AGW. The alarmists failed to effectively notify the public.

After several prominent public claims by skeptics in 2008 that there is no evidence left for AGW, alarmist scientists offered only two points.

First, laboratory tests prove that carbon dioxide is a greenhouse gas. But that observation tells us nothing about how much the global temperature changes if extra carbon enters the real, complicated atmosphere. Every emitted carbon atom raises the global temperature, but the missing hotspot shows that the effect is negligible.

Second, computer models. Computer models are just huge concatenations of calculations that, individually, could have been performed on a handheld calculator. They are theory, not evidence.

Governments have spent over $50 billion on climate research since 1990, and we have not found any actual evidence for AGW.

So if there is no evidence to support AGW, and the missing hotspot shows that AGW is wrong, why does most of the world still believe in AGW?

Part of the answer is that science changed direction after a large constituency of vested interests had invested in AGW. The old ice core data provided support from 1985, the IPCC was established by the UN in 1988 to look into human changes to climate, and the Kyoto Protocol was negotiated in 1997 to limit carbon emissions. By 1999 the western political class were doing something, the western media were rallying behind "saving the planet", and scientists were being paid by governments to research the effects of human-caused global warming.

But then the evidence took science off in a different direction: the new ice core data in 2003, the missing hotspot in 2007, and the global temperature has stopped trending up since 2001. Governments, the media, and many scientists did not notice.

The remainder of the answer for the current belief in AGW is darker and more political. An offbeat theory in the 1970s, AGW was adopted by a group of about 45 atmospheric modelers and physicists. That group dominated climate science journals, peer reviewed each others papers, and hindered competing ideas by underhand methods. AGW gained political support from proponents of nuclear power, and vice-president Gore appointed AGW supporters to science positions in the USA.

AGW grabbed control of climate funding in key western countries. Lack of diversity in science funding has been a major problem since government took over funding science in WWII. Science is like a courtroom - protagonists put forward their best cases, and out of the argument some truth emerges. But if only one side is funded and heard, then truth tends not to emerge. This happened in climate science, which is almost completely government funded and has been dominated by AGW for two decades. Skeptics are mainly scientists who are retired or who have moved on to other areas - their funding no longer depends on allegiance to AGW. The alarmists are full time, well funded, and hog the megaphone.

AGW was always promoted as being supported by nearly all scientists (though polls and history do not support this). Counting numbers of supporters and creating a bandwagon effect by announcing you are in the majority is a political tactic.

AGW always advanced principally by political means; as a scientific theory it was always weak, and now the evidence contradicts it. It's like a return to medieval times, where authority rules and evidence is ignored. Notice how the proponents of AGW don't want to talk about evidence of the causes? Anything but evidence of cause - attack people's motives, someone else "has the evidence", theoretical models, evidence that global warming is occurring, how important they are, what credentials they have, how worthy they are, the dog ate my evidence, "the science is settled", polar bears, anything. Talking about the evidence of the cause of global warming does not advance their cause. Politics says AGW is correct; science says it is wrong.

Science demands evidence. Evidence trumps theory, no matter what the political authority of those promoting the theory, even if they dress up in lab coats and have job titles that say "scientist". The hotspot is missing and there is no evidence for AGW. The alarmists cannot ignore this and continue to play political games forever. They are entitled to argue the case for AGW, but they should also acknowledge the evidence and inform the political class that AGW appears to be wrong - even if it means risking their status and their jobs (and yes, we scientists are also people who have kids and mortgages).

There are two central lies in the political promotion of AGW.

The first appears in Gore's movie. He gave the old ice core data as the sole reason for believing AGW (the rest of the movie presents evidence that global warming occurred, a separate issue). He said that increases in carbon caused increases in temperature in the past warming events. But Gore made his movie in 2005, two years after the new ice core data had established the opposite! Gore's weasel words when he introduced that segment show he knew what he was about to say was false. Who would have believed his pitch if he added "and each temperature rise occurred 800 years before the corresponding rise in carbon that caused it"?

The second lie is the hockey stick graph, which presented the last thousand years of global temperature as the flat handle of a hockey stick and the next hundred as the sharply rising blade. The hockey stick graph was heavily promoted by the IPCC in 2001, and the IPCC even adopted it as its logo before it got discredited. It is significant because most non-scientist AGW supporters seem to believe some version of the hockey stick. When the IPCC "scientists" who produced the graph were asked to show their data for past temperatures, they refused (true scientists share data). But one of those scientists was a British academic and subject to the British Freedom of Information Act, and after two years of stonewalling all was revealed. It showed they had grossly skewed the data (even omitting inconvenient data to a folder labeled "Censored"), and that the computer program used to process the data had the hockey stick shape built into it - you could feed it stock market data instead of tree ring data and you would still get a hockey stick! In reality it was warmer in the Middle Ages than today, and there was a mini ice age around 1700 from which we have since been warming ever since. Finally, the sharply rising blade of the hockey stick is contradicted so far by actual temperatures, which from 2001 to 2008 have been flat - something all of the climate models got wrong.

Among non-scientists, AGW appeals strongly to two groups. Those who support big government love the idea of carbon regulations - if you control carbon emissions then you control most human activity. And those who like to feel morally superior to the bulk of their fellow citizens by virtue of a belief (the "warm inner glow" and moral vanity of the politically correct) are firmly attached to AGW. These groups are politically adept, are planning to spend your money and tell you how to eat, travel and how to live, and they are strenuously avoiding the evidence.

The media has avoided presenting information that undermines AGW, until recently. Instead they promoted alarmism, and discredited skeptics as being in the pay of big oil - while giving a free pass to Gore, who made a movie based on an obvious lie then made millions selling carbon offsets. The media is very keen to present evidence that global warming is occurring, but have you noticed how quiet it is on evidence that carbon emissions caused it?

In 2007 almost no one in the west knew that the hotspot was missing, that there was no evidence for AGW, that temperatures had been flat for six years, that the hockey stick was a fraud, or that Al Gore lied when he gave the old ice core data as a reason for blaming carbon. But due to the Internet the public is gradually finding out anyway, which risks further discrediting many media outlets. Why buy a newspaper if it's not going to tell you the actual news?

And as the public become generally aware, what politician is going to risk being so ideologically stupid as to unnecessarily wreck the economy by slashing carbon emissions? Hmmm, Kevin Rudd?

In summary, the IPCC committed an unbelievable scientific fraud in its use of the Hokey Stick in its Third Assessment Report.

It has not yet been called to account for that fraud by media and cultural elites.

Climate models are also demonstrably fraudulent in the same way that financial models are (and you'll recall that working on financial models is something I do).

The hot spot signature in the troposphere that MUST exist for CO2 to be the primary driver of climate change does NOT exist.

Therefore, as Evans points out, CO2 has been exonerated of the charge of heating the climate.

Not that these incontrovertible facts will get in the way of the Climate Faithful pushing their socialist agenda.

Unfortunately, these facts are not getting in the way of the Australian government destroying our economy.

PS - It's bluddy cold here in Canberra. Summer should have well and truly arrived by now. My fingers are almost too cold to type this article. Must be all of that global warming they're talking about.

Thursday, 18 December 2008

Lubos Motl has a timely reminder of the roots of the modern Environmental movement.

I should note that there are two types of environmentalist.

The first is the one associated with Big Green (Sierra Club, Greenpeace etc) who use those organisations' political clout to achieve socialist policies.

The second are those who are genuinely interested in protecting the environment.

This article relates more to the former than the latter.

Many environmentalists seem to think that their movement is cool, new, original, and thought-provoking. They think that their "modern" ideas were invented by their widely promoted icons. It is hard to believe that they think so but some of them probably do. Well, the reality is very different. Similar ideas have been around for centuries and their incorporation within the modern industrial society began roughly seven decades ago.

Let me begin with the following quote:

"We recognize that separating humanity from nature, from the whole of life, leads to humankind's own destruction and to the death of nations. Only through a re-integration of humanity into the whole of nature can our people be made stronger. That is the fundamental point of the biological tasks of our age. Humankind alone is no longer the focus of thought, but rather life as a whole... This striving toward connectedness with the totality of life, with nature itself, a nature into which we are born, this is the deepest meaning and the true essence of ******** ********* thought."

Beautiful, isn't it? You may ask who wrote these sentences. Was it Jared Diamond in 2005? Or was it Al Gore in 1992? Or Rachel Carson in 1962? Or Alexander Ač in 2007? No, someone else was the author. It was Prof Ernst Lehmann, a leading German biologist.

You may also want to know that he was the leading biologist of the Nazi regime and the asterisks above replaced the words "National Socialist". The words were written as early as in 1934 and I borrowed them from Peter Staudenmaier's insightful essay, Fascist Ecology: The "Green Wing" of the Nazi Party and its Historical Antecedents. In Staudenmaier's text, you will see that the Nazis were centuries ahead of the contemporary environmentalists in their own discipline.

Of course, we're not talking about one biologist here. Like Rajendra Pachauri, Adolf Hitler was an avid vegetarian. His beloved German shepherd dogs had to become vegetarians, too. ;-) Organic farming in the Nazi Germany flourished and the country was the world's leader in this activity. SS leader Heinrich Himmler had his own organic farm and used the herbs to treat his favorite troops (Hitler preferred homeopathy to achieve the same goal). The national parks in Germany were expanding, especially in the "sacred forests".

Medical experiments on animals were banned by Hitler himself. Unfortunately, the Jewish children were exempt. Incidentally, the previous two sentences are not unrelated. One of the most important Nazis' problems with the Jews was that the Jews were promoting the alienation of man from nature: they were "anti-natural". What a sin! We know quite many ideologues who criticize the "alienation" (and its proponents) even today: these ideologues usually no longer use the word "Jews" for the "anti-natural" people.

You should also notice, as someone has quipped, that people who want to treat animals like humans also want to treat humans like animals - because these two assertions are logically equivalent.

Himmler, the regime's chief mass murderer, was actually a strict animal rights advocate, too. He considered shooting birds or animals as "pure murder" and waxed lyrical about the ancient Germanic "respect for animals" that they may have borrowed from Buddhism. Himmler was impressed by the ancient Germans who put rats on trial and gave them a chance to improve their behavior. :-)

The main person who prevented Hitler from imposing much more radical environmentalist regulations may have been Goering who liked fishing and shooting. Nevertheless, even Goering had to be politically "correct" in the 1930s so he assured Prussia that the years of maltreatment of animals under the democracy were over and anyone who flouted the Nazis' concern for animal rights would be imprisoned. Oh, he was so nice - almost as politically "correct" as Heidi Cullen.

At this moment, many green hearts among the readers must feel very jealous but let me assure you that you first have to take over the military, police, and courts, and only later, you will be able to do the "great" things that your predecessors did in the 1930s.

Hitler needed to abolish trade unions at the very beginning of his reign but there was one ban that was even more urgent and occurred earlier: in 1933, he passed the Enabling Act that regulated cooking of lobsters (this great friend of Nature hated their screams when tossed into boiling water). A few years later, hunting with dogs (and on horseback) was banned, too.

Another activity that kills many people - and that some of the "deniers" tried to justify - is second-hand smoking, right? Well, Adolf Hitler cared about it, too. In 1943, smoking was prohibited in the NSDAP offices. It was banned in streetcars in 1944. However, the great regulator realized that the ban in the Wehrmacht could weaken his military power so it was always allowed to smoke in their military offices.

Appraisal

Now, let me emphasize that the contemporary environmentalists haven't done the same set of bad things as Adolf Hitler and his comrades. On the other hand, it is equally important to notice that the contemporary greens also haven't invented any ideas or views that would be really new. Everything has been around for quite some time.

What many of these people share with Adolf Hitler - and all fundamentalists in the world - is the identification of their own views with the "perfect morality". This "perfect morality" must be imposed upon other people, too. This attitude to ethics is always dangerous. And it may become extremely dangerous if the proponents of the ideology are given the right opportunities.

In his book, The Green and the Brown: a History of Conservation in Nazi Germany, Frank Uekoetter analyzes many aspects of the tight symbiosis between the Nazi and the green movements. He also considers the ordinary greens in Nazi Germany to be opportunists.

Well, many of them have surely been opportunists and there are thousands of opportunists in the contemporary green movement, too. But you shouldn't forget that for the opportunists to exist and benefit, there must also be an opportunity. The desire of a regime, the Nazi regime in this case, to regulate human life and to prescribe everyone his or her values and behavior is an excellent opportunity for everyone whose basic goal can be described in the same words.

So it was not really a coincidence that the most environmentalist major regime in the world's history so far was the Nazi regime. If Adolf Hitler had avoided the war and the mass murder, if he had died in peace, and if the green movement began to contaminate the society in the late 20th century anyway, Adolf Hitler would surely be viewed as one of the classics of the environmentalist movement.

Unfortunately, he has also done other things which is why most contemporary greens are going to pretend that they have almost nothing to do with him, even though 90+ percent of their ideology has really been plagiarized.

And that's the memo.

I sometimes wonder whether the Useful Idiots of the Climate Movement understand exactly who they are involved with.

The irreverent Gerard Jackson points out that Australia's economy is tanking at an alarming rate.

In response, the government proposes classical Keynesian pump-priming, which will not only kick the can down the road but make things even worse when we have to take tough decisions to fix things.

It has also brought forward infrastructure development to help. While I agree in general that we should maintain a strong level of infrastructure investment it's also true that less than 25% of funding is spent in the first year after plans are announced meaning that it will have little effect in the next couple of years, which are the most critical.

On top of that the government has laid out plans for its emissions trading scheme, which starts with a modest-looking 5% reduction target but in reality is a Trojan horse for the fell hand of government interference in the economy.

Accountants and lawyers should be rubbing their hands with glee at the prospect of plunging their snouts into the public trough thus joining a bevy of fraudulent climate scientists whose pseudo-science supports the AGW position.

The Australian economy is on the skids and our economic commentariat don't even know it. The AIG (Australian Industry Group) report for November states that "manufacturing activity fell for a sixth month in a row". How can this be when unemployment has barely budged from 4.3 per cent? The important thing to note about the AIG performance manufacturing index is that anything below 50 indicates a contraction.

In June both production and the PMI fell below 50 and stayed there. Starting in September all three indicators began to rapidly fall, with employment dropping from 46 to 33.2, the PMI from 47.2 to 32.7 and production from 48.7 to 30.4. Like a bunch of bunnies caught in the headlights of an oncoming car our commentariat were mesmerised by the low unemployment rate. So long as this remained low there could be no recession. Hence their current confusion.

In 1999 I warned the US economy was heading into recession. I stressed that emphasis on the falling unemployment rate would conceal the vitally important fact that manufacturing was contracting and shedding labour. What was being called a "dual economy" was in fact and economy that was experiencing the emergence of masses of malinvestments that signalled the beginning of a recession. The economy still appeared sound to economic commentators because unemployment was still falling.

But what they could not grasp — and still can't — is that monetary expansion had increased the demand for labour at the lower stages of production; those close to the point of consumption. Eventually the recession would work its way down the production structure, cutting output and raising the level of unemployment. This is exactly what happened, just as it happened to Clinton it happened to Bush. The same thing is also happening to the Australian economy.

Despite the fact that statistics clearly show the recession first striking at manufacturing (the higher stages of production) our brilliant economic commentariat insist on promoting the Keynesian snake-oil recipe of increased consumption spending to "counter the downturn". We had eight "prominent economists", apparently led by former Treasury secretary Tony Cole, proposing that Rudd temporarily cut superannuation contributions in order to increase consumption spending.

What they are proposing is based on the mercantilist myth — taken up by Keynes — that consumption drives the economy. Not one single member of the financial media know this. George Megalogenis, a senior writer for The Australian, is typical of the breed. According to this genius there need be no rise in unemployment because

"The case for business hanging on to staff is stronger than it was during recessions in 1990-91 and 1982-83 because the economy is in a radically different shape."

This is sheer economic illiteracy. Completely undeterred by economic laws, Megalogenis went on to argue that dismissing labour simply because the demand for a company's products is dropping is really "dumb" because it

"will only make any recession deeper than it need be because every dismissed worker drags down consumer spending with them. (Business's new mantra, The Australian, 6 December 2008)."

This is the purchasing power of wages fallacy which holds that it is higher wages that raises living standards. This argument leads to the utterly absurd conclusion that poor countries can easily lift themselves out of power by legislating for wages to be raised to Western levels. To make is so simple that even Megalogenis can grasp it, wage rates are determined by the value of the worker's marginal product. In plain English, his productivity. And the only thing that can bring about a sustained increase in productivity is capital accumulation.

Completely blind to what ought to be self-evident errors Megalogenis pursues the fallacy, arguing that the beneficial effects Rudd's $8.68 billion binge that is directed at "those with the most pressing living expenses" could be offset by higher income earners increasing their savings.

Let us understand something fundamental here: Savings fuel an economy and entrepreneurship drives it. Without savings there can be no capital accumulation, i.e. economic growth. Increased consumption is the result of this process, not the cause. The classical economists understood that what a country needs if it wants more consumption is more production.

What our media economists have yet to understand is that though consumption is something like 66 per cent to 70 per cent of GDP, the latter greatly underestimates economic activity because it does not take account of the expenditure of intermediate goods on the false grounds that it would be double-counting. My own rough estimate put consumption at about 33 per cent of total spending, meaning that nearly two-thirds of this spending would be by business. Given this approach it is easy to see that it is business spending that propels the economy and not consumption. John Stuart Mill presented the classical view on this matter when he wrote:

"What a country wants to make it richer, is never consumption, but production. Where there is the latter, we may be "sure that" there is no want of the former. (John Stuart Mill, Essays on Economics and Society 1824—1845, Liberty Fund, 2006, p. 263)."

Once again the economic commentariat find themselves without a clue. But surely Rudd's spending of the surplus could help stop the recession? No way. I do not know of a single case where consumption spending lifted an economy out of recession. Although it's possible for a government to trigger a consumption boom, such a boom would be marked by a largely stagnating manufacturing sector.

Moreover, from a purely economic perspective consumption alone could only be relied on to avert or overcome recession in a two-stage economy. This one in which there is a single production stage. The maintenance and supply of capital would then depend entirely on consumer demand. It goes without saying that this would be an impossible state of affairs. We live in a world of multiple stages of production. It can be no other way. However, the two-stage model brings into focus the fact that the argument for consumer spending to rescue the economy from recession is actually based on the fallacy of underconsumption.

In any event, recession has arrived and I consider an unemployment rate of 10 per cent to 12 per cent a distinct possibility, particularly when one considers Rudd's reactionary approach to wage rate determination.

Consider the following from the Australian Industry Group.

Performance of Manufacturing Index

Manufacturing activity fell for a sixth month in a row in November.

The seasonally adjusted Australian Industry Group-PricewaterhouseCoopers Australian PMI® fell solidly, by 7.7 points to 32.7, well below the 50 point mark separating expansion from contraction. This represents a second consecutive new low for the series since it was begun in 1992.

Recent results reflect an accelerating loss of consumer and business confidence, driven by worsening news on the global economy, falling household wealth, and the weak housing sector. This climate is being reflected in falling demand for manufactures.

November’s fall in the Australian PMI® reflects declines across all components of the index. Production fell for the sixth consecutive month and more strongly than in recent months. This reflected the ongoing decline in new orders, which fell rapidly and for the seventh consecutive month. In line with the easing of production, employment fell for the ninth month in November.

The sales, new orders and employment sub-indexes all fell to new record lows in November, while supplier deliveries and inventories also declined significantly.

The falling price of oil and commodities lead to a moderation in input cost increases, while selling price growth remains subdued.

While the weakness in services remains broadly-based, the rate of contraction did slow in personal & recreational services; accommodation, cafes & restaurants; and finance & insurance.

Activity fell in all states, with the rate of contraction slowing only in Tasmania.

Performance of Construction Index

The national construction industry contracted further in November, and at a more rapid pace than the previous month, as the global economic and financial crisis and heightened aversion to risk continued to take a heavy toll on activity.

The seasonally adjusted Australian Industry Group/ Housing Industry Association Performance of Construction Index (Australian PCI®) fell by 4.4 points to 32.0, to remain below the critical 50 point level (which separates expansion from contraction) for a ninth consecutive month. Moreover, it signalled the second steepest fall in industry conditions since the survey began in September 2005.

The decline reflected reductions in activity on a broad industry front, although the worst conditions were evident in the house building and apartment sectors where activity fell to new survey lows.

Most firms linked the reduction in total construction activity to the on-going economic crisis and poor market demand. There were also reports that competition to secure contracts had intensified, resulting in a higher level of unsuccessful tenders and diminishing new project work.

For the industry as a whole, levels of activity, new orders and employment all fell substantially in November and at record rates (for this survey). As a consequence, firms were forced to further scale back their deliveries from suppliers.

While construction material (input) costs increased, the rate of growth moderated for a second consecutive month.

This is all bad, bad news for Australia.

Our economy is held up by the IMF and others as an example for the rest of the world to follow. I suspect that this opinion has lulled political leaders in Canberra into a false sense of security that has led them to make the shocking decision to stick $10 billion into the economy to try to avoid the recession.

Note to Labor. The recession has arrived and it's impossible for a dose of Keynsian economics to subvert the laws of financial gravity.

Monday, 15 December 2008

Iraqi journalist Muntazer al-Zaidi from Al-Baghdadia television network achieved glory throughout the Ummah and from their left wing soulmates in the rest of the world when he undertook the time honoured Arab tradition of throwing one's shoes at an opponent.

Check out Dailykos, Firedoglake, HuffPo etc etc and you'll see many posts supporting al-Zaidi and sliming President Bush.

Parenthetically, when has a mainstream right wing blog or news outlet been anything other than outraged when a Democratic president is treated so shabbily?

By working for an organisation that didn't exist under Saddam and attending a press conference that would never take place under Saddam hosted by a democratically elected leader that didn't exist under Saddam and enjoying the newly minted freedom that didn't exist under Saddam and shouting "It is the farewell kiss, you dog" showing he did not feel the threat to his personal safety that existed under Saddam and throwing his shoes at a world leader that under Saddam would have seen him fed feet first into a tree shredder, Muntazer al-Zaidi - journalist, nascent pin up boy of the Muslim world and hero of the world's left - confirmed Bush's greatness.

That is the irony that the left has missed in its pathological hatred of George W Bush.

Freedom reigns in Iraq.

Bush made it happen.

It would never have happened under a President Gore.

The old feller has pretty good reflexes, too, don't you think?

That's impressive stuff.

The fact that he kept his composure and gave his response within the framework of the legitimacy of dissent in a free society probably taught the Iraqis a valuable lesson.

Sunday, 14 December 2008

Carlos Augusto Santana Alves (born July 20, 1947 in Jalisco, Mexico) is a Grammy Award-winning Mexican rock musician and guitarist. He became famous in the late 1960s and early 1970s with his band, Santana, which created a highly successful blend of rock, salsa, and jazz fusion. The band's sound featured his melodic, blues-based guitar lines set against Latin percussion such as timbales and congas. Santana continued to work in these forms over the following decades. He experienced a sudden resurgence of popularity and critical acclaim in the late 1990s. Carlos Santana has been known as "The Carlos". Rolling Stone also named Santana number 15 on their list of the 100 Greatest Guitarists of All Time in 2003.

Saturday, 13 December 2008

Christopher Booker has attracted the ire of the Euro-left in general and Climate Faithful in particular for his unwelcome habit of pointing out that the emperor has no clothes.

Vaclav Klaus is another who has attracted the same ire but being the leader of a member state of the EU makes it harder to dismiss his views.

Not that it stopped Daniel Cohn-Bendit, a Green Franco-German MEP, from assailing Klaus for his views on the Lisbon Treaty and climate change.

Imagine that a Franco-German MEP, invited to meet the Queen at Buckingham Palace, plonked down in front of her an EU "ring of stars" flag, insisting that she hoist it over the palace alongside the Royal Standard, and then proceeded to address her in a deliberately insulting way. The British people, if news of the incident leaked out, might not be too pleased.

Something not dissimilar took place at a remarkable recent meeting between the heads of the groups in the European Parliament and Vaclav Klaus, the Czech head of state, in his palace in Hradcany Castle, on a hill overlooking Prague. The aim was to discuss how the Czechs should handle the EU's rotating six-monthly presidency when they take over from France on January 1.

The EU's ruling elite view President Klaus, a distinguished academic economist, with a mixture of bewilderment, hatred and contempt. As his country's prime minister, he applied to join the EU in the days after the fall of Communism in the 1990s. But now Klaus is alone among European leaders in expressing openly Eurosceptic views, not least about the Lisbon Treaty, which the Czech parliament has yet to ratify.

Klaus was an outspoken dissident under the Communist regime, and he has come to regard the EU as dangerously anti-democratic. But he compounds this sin with highly sceptical views on global warming, on which he recently published a book, Blue Planet in Green Shackles. He likens the extreme environmentalism favoured by the EU to Communism, as a serious threat to democracy, freedom and prosperity.

So when Klaus was due to meet the MEPs, one of them decided this was a moment to display the Euro-elite's hostility to him. Daniel Cohn-Bendit, who is German born but lives in France, first came to prominence in Paris in 1968 as a student agitator. He is now leader of the Green MEPs. Talking loudly in the plane to Prague, he made no secret of his intentions, and brief French journalists on how to get maximum publicity for his planned insults.

I happen to know the splendid room in which the meeting took place, because I sat there myself with President Klaus in 2005, when he had arranged for a history of the EU I had co-authored to be published in Czech. As Cohn-Bendit was aware, the only flag that flies over the castle is the presidential standard (though the "ring of stars" is much in evidence elsewhere in Prague, flown outside every government ministry).

As described to me by someone present, President Klaus greeted the MEPs with his usual genial courtesy. Whatever his own views, he assured them, his countrymen would conduct their presidency in fully "communautaire" fashion. Cohn-Bendit then staged his ambush. Brusquely plonking down his EU flag., which he observed sarcastically was so much in evidence around the palace, he warned that the Czechs would be expected to put through the EU's "climate change package" without interference.

"You can believe what you want," he scornfully told the president, "but I don't believe, I know that global warming is a reality." He added, "my view is based on scientific views and the majority approval of the EU Parliament".

He then moved on to the Lisbon Treaty. "I don't care about your opinions on it," he said. If the Czech Parliament approves the treaty in February, he demanded, "Will you respect the will of the representatives of the people?"

He then reprimanded the president for his recent meeting in Ireland with Declan Ganley, the millionaire leader of the "No" campaign in the Irish referendum, claiming that it was improper for Klaus to have talked to someone whose "finances come from problematic sources".

Visibly taken aback by this onslaught, Klaus observed: "I must say that no one has talked to me in such a style and tone in the past six years. You are not on the barricades in Paris here. I thought that such manners ended for us 19 years ago" (ie when Communism fell). When Klaus suggested to Hans-Gert Pöttering, the president of the EU Parliament, that perhaps it was time for someone else to take the floor, Pöttering replied that "anyone from the members of the Parliament can ask you what he likes", and invited Cohn-Bendit to continue.

"This is incredible', said Klaus. "I have never experienced anything like this before."

After a further exchange, in which Cohn-Bendit compared Klaus unfavourably with his predecessor, President Havel, he gave way to an Irish MEP, Brian Crowley, who began by saying "all his life my father fought against the British domination [of Ireland]… That is why I dare to say that the Irish wish for the Lisbon Treaty. It was an insult, Mr President, to me and the Irish people what you said during your state visit to Ireland." Klaus repeated that he had not experienced anything like this for19 years and that it seemed we were no longer living in a democracy, but that it was "post-democracy which rules the EU".

On the EU constitution, Klaus recalled that three countries had voted against it, and that if Mr Crowley wanted to talk about insults to the Irish people, "the biggest insult to the Irish people is not to accept the result of the Irish referendum". This provoked Crowley to retort angrily, "You will not tell me what the Irish think. As an Irishman, I know it best."

Everntually Pöttering closed the meeting by saying that he wanted to leave the room "in good terms", but it was quite unacceptable to compare himself and his colleagues with the Soviet Union. Klaus replied that he had not mentioned the Soviet Union: "I only said that I had not experienced such an atmosphere, such a style of debate, in the Czech Republic in the last 19 years."

This bizarre confrontation, which has been recounted and discussed with shock across formerly Communist eastern Europe, confirms the inability of the Euro-elite to accept that anyone holds different views from their own, on Lisbon, global warming or anything else. As we see from the way our own political parties are run, when it comes to "Europe", the system has no place for opposition. Everything must be decided by "consensus", directed from the top. There is only one approved "party line". Apart from a few little powerless dissidents round the edges, the EU is thus in essence a one-party state.

It was a sense of this that powerfully influenced the French, Dutch and Irish people, when they were given the chance, to vote against the constitution which will cement that one-party state into place more firmly than ever. And it explains why, last week, the European Council told the Irish that they must hold their referendum again, on the understanding that this time they will get it right. That is the way one-party states behave – as President Klaus, who lived under one for the first 50 years of his life, knows only too well.

Do people ever stop to analyse exactly why it is that a Marxist such as Daniel Cohn-Bendit would not only hold the strength of views he does about Lisbon and climate change but also feel that he had the freedom in which to act like a child?

Friday, 12 December 2008

Does Barack Obama's promise to remove lobbyists from the Washington scene mean that auto industry lobbyists have had their day or is it just another promise to be broken?

(click to embiggen)

Amit Ghate is a guest writer for the Ayn Rand Center for Individual Rights. The Ayn Rand Center is a division of the Ayn Rand Institute and promotes the philosophy of Ayn Rand, author of Atlas Shrugged and The Fountainhead.

Everywhere today politicians are blaring that they must save America’s financial institutions, alleging catastrophic risk to the economy were any to fail. Paulson and the entire Bush administration, in a discernible panic, are now pouring $700 billion into the big banks, having already bailed out AIG, Fannie Mae, Freddie Mac, and Bear Stearns to the tune of $300 billion.

Capitalism doesn’t work, they declare, but fortunately the government is here to rescue us. Sadly, they have it all backwards. The credit crisis is just more evidence that whenever the government supplants the free market and attempts to “manage,” i.e., control, the economy — disaster ensues.

Overlooked here is that in a free market business failures are not just normal, they’re crucial for the best products and ideas to emerge. Most restaurants fail in their first three years because customers have other preferences. Many mom-and-pop grocers go out of business because Walmart offers better selection and lower prices. Even whole industries — think typewriters, 8-tracks and horses and buggies--vanish because new inventions and competitors arise.

None of these failures are a problem, nor do they threaten the system. On the contrary, they are an inherent part of the progress which only capitalism makes possible. So why would failures in the financial industry be any different?

Typically, the answer given is also the one used to rationalize the creation of the Federal Reserve, the FDIC, the FSLIC and any number of other government agencies and regulations intended to “manage” the banking system: financial firms carry systemic risks for the nation’s economy and therefore can’t be allowed to fail. As evidence, bank failures from 1870 to 1913 (pre-Fed) are cited, followed by the assertion that their number was simply “unacceptable.”

But every business forms part of the economic system and thus has “systemic” impact. If Microsoft were to fail, thousands of suppliers, customers, and workers would be affected, as would their customers, suppliers, workers, etc. Yet this would be no reason to bail them out. We know that new businesses would arise to fill the void, better for having learned from Microsoft’s mistakes.

And as a historical fact, the U.S. economy during the period 1870 to 1913 grew significantly faster than it did after the Fed was established. True, there were many bank failures in this period, but there were also many business failures in general: banks were actually less likely to fail than were other businesses. The number of bank failures speaks to the dynamism of the period, not to anything fragile in the financial system. Precisely because market mechanisms were permitted to work, depositors, creditors and counterparties all kept a close eye on banks, monitoring leverage and withdrawing funds at the first sign of problems.

When the free market functions — and failure is allowed--people become viscerally aware of risk, with the result that they voluntarily assume less of it. Conversely, when the government tries to “manage” the economy — when the consequences of risky behavior are shifted from self-interested actors to taxpayers, as was done by the creation of the Fed and its various insurance programs, or when weak financial firms are propped up rather than being allowed to fail — people take on risks they would not otherwise. Banks are less careful, depositors no longer evaluate their institutions, and risks are concealed and amplified until they become catastrophic.

So pre-Fed we had runs on banks, some undoubtedly severe — but with the Fed we’ve had the Great Depression, the S&L meltdown and now perhaps the greatest worldwide credit crisis ever. An analogy may be helpful here. Historically certain types of forests naturally experienced frequent, but small, wildfires. Because their frequency kept deadwood at a minimum, the fires never grew into large conflagrations.

However, when government forestry services instituted fire suppression policies, they eliminated most small fires, but caused deadwood and other fuel to accumulate. When at last a fire came that could not be suppressed, it grew into a devastating inferno. Learning from their errors, forestry services have abandoned fire suppression policies. I

It's time for our government to do likewise. First, by immediately abandoning its bailout binge, and then by phasing out all of the economic controls by which it attempts to “manage” the financial system — from the FDIC to the Federal Reserve itself. Nothing less can reestablish the freedom essential for a sound and vibrant economy.

Failure is the most important part of the capitalist system.

It's what drives people forward.

When things are going well and life is easy nothing is learned.

When things are tough people learn from their mistakes.

The US government's bailout of the auto industry provides no opportunity for analysis of past mistakes to take place.

Here's a bit of a clue, though...

...it's Ford's 2007 master contract with the UAW. About twice the height of a can of Diet Coke and $35 billion more expensive.

Thursday, 11 December 2008

I do not think that Joe Public understands how bad the economic crisis could become.

The recent US election saw both candidates pledging to work hard to solve the problem.

If both sides thought it could be fixed by government intervention then why should the public have any other expectation?

Consider the following graphs:

If these graphs, and that last one is particularly confronting, were broadcast in an advertisement on TV every night then there'd be panic in the streets.

And so there should be.

I think that things are going to get much worse before they begin to get better.

Here are my predictions.

United States

The US has moved from being a creditor nation to debtor nation in a relatively short time. This change has been financed mainly by Asia and specifically Japan and China.

As Douglas V. Gnazzo points out:

One bread winner used to earn enough to support the entire family. This is no longer the case for most American households. It now takes two.

The savings of the American people is at all time lows, less than one half of one percent. Debt levels are at historic highs. Our government is running deficits of unprecedented proportions.

I do not see the Obama administration making the hard decisions needed to turn things around.

Can you see Harry Reid and Nancy Pelosi supporting corporate tax reductions, reduced government spending and no bail outs?

It won't happen and the consequences will be dire.

Unemployment in the US will top 10% before this is over and could reach as high as 15%. The stock market will fall to 4000-5000 though the real value will be even lower, as the government will try to print money to ease the pain thus guaranteeing a long downturn. Inflation will also top 10% meaning that stagflation will be the order of the day.

The stock market will not recover to 10,000 in real terms for at least 10 years.

So get ready, America, for some rough times. However, anyone who thinks that this spells the end of America's dominant influence in the world is in for some disappointment.

Europe

Socialist populism has been the scourge of Europe for decades and it has left them even less able to cope with a downturn than the US.

Huge pension liabilities to fund, a nanny state attitude, inflexible labour markets and over-regulation via the EU will all contribute to deep, deep problems and particularly in Western Europe.

Add in the difficulties of unfettered immigration of people who can make no contribution to the restoriation of Europe's fortunes and you have a recipe for societal disaster - a powderkeg waiting to go off.

The UK will increase its intrusion into people's lives, especially when the public blames migrants for the situation, which is inevitable, thus improving the country's chances of becoming the next fascist state in Europe (it's currently in a race with Germany).

It's more difficult to tell where unemployment will end up in Western Europe. I expect it will be a bit worse than the US in some countries and a bit better in others though things in Spain look spectacularly grim.

Key to the recovery of Western Europe will be whether its leaders implement the policies required to reduce greenhouse gas emissions to the levels they're targeting or whether they'll start listening to the real scientists who have been warning of the AGW scam for a few years now. I suspect the latter, though they'll fob it off on China and India refusing to cut emissions as the reason for taking no action.

The new democracies in Eastern Europe haven't had long enough to build up the problems that the West has so I expect them to experience a mild downturn.

Asia

Overall, Asia is in pretty good shape to ride out a downturn.

Japan runs a large budget surplus and has a high savings level so it's going to be able to get through reasonably well although companies such as Toyota, Honda, Mazda and Subaru etc are going to have a tough time due to the downturn in the world's largest car market - the US.

China also runs a large surplus and should be able to spend its reserves on cushioning the blow somewhat, though the Chinese leadership faces a larger issue of social advancement that will test their skills.

India is also in pretty good shape and, in fact, I expect Asia to do best over the next 4-5 years though Singapore might have a problem or two given its reliance on the financial sector for its income.

In summary for Asia: unemployment up, inflation up a bit, interest rates down a tad.

Australia

Unfortunately, our new Labor government is taking exactly the wrong steps to deal with the problem by using $10 billion from the surplus to try to pump-prime the economy.

Has never worked and won't this time.

This government is one that favours symbolism over hard decisions. Stuffing $10 billion into the economy is not a hard decision and has been greeted enthusiastically by Australians, as it comes before Christmas.

Unfortunately, all it does is kick the can down the road.

The only reason I can think of for the government to make such a poor decision is that they think the downturn in the rest of the world will be a relatively short one, measured in months rather than years.

At Christmas time next year they will know they are wrong and will head into an election year in a poor economic environment.

By 2010 unemployment will top 8%, inflation will top 8%, mortgage interest rates will fall well below 6%.

The Rest

The Middle East will suffer significantly reduced income due to oil dropping below $30/barrel and maybe below $20. None of them are democracies so the people will suffer but hopefully the main sufferers will be those who are spending money supporting various terrorist networks around the world.

South America is completely stuffed. The place has been a basket case for decades but the problem is that the financial collapse that simply has to happen will leave the door open for an expansionist China to increase its influence in the Western hemisphere by helping bale out strategic states. Argentina will do what it has done in the past and default on its loans. Venezuela in a $30/barrel oil environment will not be able to prop up Cuba or Bolivia and will either become a full dictatorship or chuck Chavez out and start again. My money is on the madman at this point. Brazil has been a powerhouse in recent years and few regions in the world are not serviced by their terrific Embraer aircraft so it will be interesting to see how badly they are affected. It's hard to make predictions.

Overall, the world is in bad shape. Reserve banks have increased the money supply recklessly, which has led to malinvestments that simply have to be corrected. Printing more money to chuck into the malinvestment fire is not going to work so things will get a lot worse before they get better.

Tuesday, 9 December 2008

Is there some chance of too much red cordial leading to a new video series Six Year Olds Run Amok?

Security guards have been hired to watch over a grade 1 barbecue at a primary school in Melbourne's outer north-east.

Radio 3AW has reported that a letter from the Department of Education and Early Childhood Development confirmed the presence of security guards at the end-of-year gathering for the group, which would largely be six year olds.

The Age contacted the school and was told the principal would make an announcement this morning. The Department of Education was also unavailable to provide immediate comment.

What can the excuse be for this?

'Protecting' the kids?

If so then from whom?

It will be interesting to see what twaddle is trotted out to justify such an outrageous waste of money.

UPDATE:

Hurstbridge Primary School principal Jan Shrimpton today confirmed the security, saying it was necessary due to the "actions of a small number of parents''.

In a statement issued to The Age, Ms Shrimpton said the Department of Education and Early Childhood Development was taking "every step'' to ensure a healthy and safe workplace for school staff.

"This includes the provision of security services during the school day and at a number of school events, as determined by me,'' she said.

"I want to stress that this is not about students' behaviour but about the actions of a small number of parents."

The school would not comment further as to what the actions were.

"As principal of this excellent school, I will not tolerate any threat to the health and safety of my staff or any disruption to students,'' Ms Shrimpton said.

"A safe teaching and learning environment is absolutely necessary, and working with the Department of Education and Early Childhood Development, I intend to ensure that the school provides that.''

This sounds like complete BS to me.

If parents had made threats against teachers, for example, then the police should be involved.

If the BBQ creates an environment in which AVOs may be breached then ditto.